What is a Startup?

When I hear about startups, I imagine ambitious young entrepreneurs looking to create something so innovative that it would grow exponentially and disrupt the market. Startups are all unique products or services you can not find before in the targeted market. For example, Airbnb. This startup completely changed the outlook on how the rental industry worked. 

What are Company Products?

Company products are the services or products manufactured by or for a company. Another dealer or company can manufacture these products (as mentioned above) under contract from a particular company. Later, these products are sold by the company or its subsidiaries for whom the products were made for.

For example, an IT agency hires a third-party manufacturer to upgrade its existing computer systems. In short, company products are rigorously tried and tested before they launch with more chances of success.

Differences Between Startups and Company Products

The most common differences to note between the two are:

1.  Innovation

The main difference between a startup and a company product is innovation. Company products don’t claim to be unique. They can easily be compared to other companies' products or services. For example, managed services provided by IT agencies. When compared, they aren’t much different.

However, this doesn’t mean that company products don’t offer development and profits. They do so but at a steady pace. These products create and maintain revenue streams with reduced costs.

In contrast, a startup thrives on innovation. A startup strives to create an entirely new product or a product that is exceptionally better than the available ones. Startups want quick growth, with every development stage focusing on attracting new investors and funding.

2.  Funding

Company products already exist in the market. For this reason, business owners don’t have to pitch revenue projections to high venture capitalists who only want to double their wealth and investment. Therefore, they can take funding from small banks to finance their products.  

In contrast, startups are backed by venture capital firms. Entrepreneurs must pitch thorough growth and profit projections to receive funding. Your business plan should also define how this funding will increase the startup's worth and the ways set out to achieve this growth.

One thing to remember is that the venture capital firm or angel investor is more actively involved in the operations of the startup they fund. They will be checking in more often on the progress and what advice they can give throughout the development phase.

3.  Risk

Company products don’t innovate. Every business and company product is risky, but these are calculated risks that the business is willing to take. Most of the work in the form of a solid business strategy is already laid out for company products.

However, this doesn’t mean that company products will scale at a rapid pace. Even with a solid strategy, they will take time to grow. The main focus is the steady revenue streams generated by sticking to tried-and-tested best practices.

On the other hand, a startup is a brainchild of an ambitious entrepreneur. Startups utilize the latest technologies and deliver a brand new product or service. However, doing so requires more work and time as the entrepreneur has to build the startup from the ground up.

Therefore, a startup is way too risky than company products. Even though startups take more time and effort (like a lot), they still have higher chances of failure.

4.  Growth Factor

Company products’ main focus isn’t growth. While a company would love to grow, its main priority is developing quick profit streams. When steady profits start coming in, the company may decide to innovate or redesign the existing products.

In comparison, startups are designed to grow fast. This means that a startup offers something new to a broad market. Company products don’t do that. These products target only a specific market and serve it.

Startups are technology-oriented with tremendous growth potential. This growth should be within a short time with possible large-scale expansions. This doesn’t lower the risks involved in funding and building a startup.

5.  Profit

Company products are made with the intent to gain fast earnings and quick profits. In short, if it were possible, the company would want ROI on these products from day one. However, the net or closing profit depends on a lot of factors, including the main factor ‘potential redesign’.

Compared with company products, startups may not offer their first pennies for months or even years. The driving force behind a startup is creating something that the target market will like and use. If or when this intent is achieved, the resulting profits will be in seven figures.

For example, in 2022, Uber is almost worth 52 billion pounds, and Airbnb is worth 62.36 billion pounds. Don’t let numbers fool you because startups can fail before making a single penny. You have to be careful with your startup approach and analyze all possible risks and strategies before you decide to pursue this path.

Conclusion

Business involves risk, whether you launch an existing company product or a startup. But it is on you to decide if you want to take calculated risks or jump into an ocean of uncertainty. Company products create a source of earnings and possible profits, but the same can’t be said about startups.

If you have limited funding and can’t tolerate failure, it is best to go for company products. They are reliable and stable with an existing business strategy that you won’t have to build. In the end, it boils down to your choice. What are your thoughts?